The University of Saskatchewan Bookstore (the bookstore) sells textbooks to stud
ID: 2410294 • Letter: T
Question
The University of Saskatchewan Bookstore (the bookstore) sells textbooks to students. At the beginning of May, the bookstore has no textbooks in inventory. During May, the bookstore purchases textbooks for Intro to Financial Accounting (accounting). The bookstore uses a perpetual FIFO system to track inventory. Record the journal entries the bookstore should make on each day listed below.
May 1 Purchased and received 50 accounting textbooks from McGraw Hill at a cost of $100 per book under terms 2/10, n/30.
May 3 The bookstore realized all 50 of the books purchased on May 1 were missing the pages for Chapter 7, so the bookstore paid an additional $5 cash per book to Book Repairs Inc. to add in the missing pages.
May 4 Based on the issue encountered on May 3, the bookstore sends a complaint to McGraw Hill. In response, McGraw Hill reduces the price of each book purchased on May 1 by $10.
May 6 The bookstore pays McGraw Hill the amount it owes for the May 1 books.
May 8 The bookstore sells 45 accounting textbooks to students for $150 cash per book.
May 9 After the first day of class, three (3) of the students realize the accounting professor is a bit strange, and they decide to drop the class. Each of these three students returns their accounting textbook to the bookstore, and in return, they each receive a $150 bookstore gift card.
May 12 The bookstore receives another 40 accounting textbooks from McGraw Hill at a cost of $110 per book under terms n/30.
May 14 The bookstore sells another 20 accounting textbooks to students for $150 cash per book.
May 25 McGraw Hill releases a brand-new edition of the accounting textbook; as such, demand for the accounting textbooks purchased during May has declined. To compensate, the bookstore reduces the price of each of its May accounting books to $95, as this is all customers are willing to pay.
May 31 After performing the month-end inventory count, the bookstore realizes two (2) of the accounting textbooks have been stolen.
Explanation / Answer
date Accounts Title Dr Cr 1-May Inventory $5,000 Accounts payable $5,000 3-May Inventory $250 cash (50*5) $250 4-May Accounts payable $500 Inventory (50*10) $500 6-May Accounts payable $4,500 Inventory (4500*2%) 90 Cash $4,410 8-May Cash $6,750 Sales (45*150) $6,750 Cost of good sold 4194 Inventory 4194 ((5000+250-500-90)/50*45) 9-May Sales Return (150*3) $450 Gift Card $450 Inventory 280 Cost of good sold 280 ((5000+250-500-90)/50*3) 12-May Inventory $4,400 Accounts payable (40*110) $4,400 14-May Cash $6,750 Sales (20*150) $6,750 Cost of good sold 2065.6 Inventory 2065.6 ((5000+250-500-90)/50*(5+3 books))+(12*110) 25-May Cost of good sold $300 Inventory $300 Stock remaining 40-20=20 books (20*(110-95) 300 31-May Cost of good sold (2*95) $190 Inventory $190 If any doubt please comment
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